French newspapers these days, the newspaper Le Monde in mind, show a striking ignorance of economic theory, drivel continue to succeed in articles that claim to address the crisis. But nothing new under the sun, this state of things is the fruit of a long half-century of denial of reality, denial to examine the facts and exaggerated beliefs in the politics of Santa Claus.
After a eulogy of excessive state intervention and its benefits, now we are told, with an icy pessimism, we are facing a terrible dilemma. The kind of apocalyptic dilemma leaves us with options disastrous, is the famous choice between plague and cholera.
Given the abysmal deficit in our states and their stratospheric debts must they resign themselves to lower their expenses is the austerity measures, the austerity policy and so on. Otherwise station: the bankruptcy!
But if we cut spending drastically, officials do not consume as much as before, private companies will aid their failures and lack of public projects will destroy jobs by the millions. Bankruptcy is inevitable successor, unemployment explode, consumption fell, then other companies will go bankrupt, thereby aggravating the unemployment therefore consumption will drop again, the terrible cycle of recession the famous deflation trap, you know the song.
In all cases it is done for, there is no hope.
This factual analysis is indicative of the incomprehension of the most basic economic laws.
When a State (or any institution private or public) is in deficit, it consumes more than it produces, in other words that it destroys more it only creates. We must therefore reverse the trend.
Take for example a self-sufficient village whose people consume more food than it produces;'re definitely more cartoonish, the village chief, his henchmen and favorites consume more food (they are taking force) the village (and farmers) it produces.
In any case the village would be sentenced to die in famine.
It would not occur to anyone to solve this preposterous crisis by proposing an increase in the consumption of foods of the village ; The pretext that if, in our example caricature, the chef, his henchmen and favorites by consuming more food (they take by force) were working more farmers. The problem would only worsen. In fact farmers can not magically increase production. What happens with remarkable pathos is that they eventually run out at work just to feed themselves and their families and ultimately the community will disappear.
Basically it's a little what we said every day in the media! With the difference is that people would not accept to be excessive tax, which explains that the State uses alternative means such borrowing (which is a deferred tax on future generations) or inflation (which is an invisible tax).
But if we reduce government spending, we were repeatedly told, there will be a terrible recession. There will be certainly a crisis but a crisis is actually a symptom of a bad situation that has become suddenly obvious: it tells us that something was wrong (ie we lived above our means and it could any longer) and the crisis serves as our developer This state of affairs.
So yes! The crisis will have a solid scrubber. Many companies will disappear, the sphere of the state will be reduced, and all this will last until the return to a sustainable level. In our village self-sufficient, the chief, his henchmen and his minions should stop taking food in an authoritarian manner and could make himself useful, for example by improving the productivity of farmers.
This is not consumption that creates wealth, is saving.
In fact our elite fear above all the crisis as it may, as I explained in my previous post , to bring in its wake. They are primarily responsible for this financial mismanagement
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